Risk Management - Essay Example

1. What is the significance of reviewing the existing risk managements processes, procedures and requirements at the commencement of ‘establishing risk context’ stage of the risk management process? Establishing the risk context is essential in identifying the limits of any organisation, their risk management processes and the expected results. Before instituting the context it is important to review the existing risk management as it has already evaluated the potential risks that can be sustained and losses incurred.

These processes have helped to introduce necessary measures to reduce the probability of occurring risks. Reviewing these existing procedures helps to improve and reassess their ability to mitigate and manage risks. It also helps to identify the probability of new risks and the likelihood of past risks occurring again. This is essential in establishing the value of existing strategies and the effect they have had on the organisation’s assets, profitability, risk management, and their cost effectiveness. 2. Why is it essential that the scope of your risk management is clearly identified?

The scope of risk management encompasses many things like identifying personnel such as stakeholders, timeframes, specific areas that need to be reviewed, and the applicability of certain strategies. Therefore, it is very important that the scope be properly defined. This would help in accurately applying risk management sources without unnecessarily replicating them, help involve stakeholders, and aid in achieving the desired goals. It will also help the organisation to manage their resources, target specific risk management areas, set proper timeframes for strategies and precisely define the desired goals. 3. Identify the possible internal and external stakeholders that an organisation might have.

Internal External Employees Manager Owners Departments Work teams OHS department Committees Shareholders (e.g., small groups and business) Suppliers Society Government Creditors Shareholders (e.g.: public listed company) Customers Agents Other businesses Finance companies Chambers of commerce Creditors 4. Why is it important to consult with stakeholders when you are in the process of establishing the risk context? Different stakeholders have different issues and concerns, which means that we need to maintain a high level of interpersonal skills to engage stakeholder cooperation and find out what works for everybody, as well as be aware of what do they want to be informed of and when.

Consultation with stakeholders will enable development and open communication, encourage cooperation, build communication early, and also give early notice of some issues that may arise (e.g., costs, timing, resources, other personnel involved and aspects of the process itself). Stakeholders can provide risk managers with information about risks and who is likely to be affected by the processes, potential impacts or outcomes of the identified risks. They may have a much broader knowledge about risks, and therefore be able to help in identifying impacts. 5. What specific types of documentation should be reviewed during the ‘establishing risk context’ stage of the risk management process for the following areas?

Area / context Documentation Political and legal context Companies’